MGM fails to find ‘fundamental inconsistencies’
May 9, 2014
By Carley Dangona
BOSTON – A week after three judges ruled in favor of the town of West Springfield, MGM Springfield went before the Massachusetts Gaming Commission (MGC) with changes to the payment determination schedule that it deemed as “Fundamental Inconsistencies” (FI).
MGM wanted the opportunity to decrease the payments to the town if the impacts were less than originally estimated. The look back period as structured in the agreement only allows for the payments to be increased. The arbitration agreement and subsequent payments remain as determined on April 24.
Representatives from MGM and West Springfield went before the MGC at the regular meeting on May 2. Under the gaming legislation, details of the agreements that are FI with the law can be brought before the MGC. The commission changed the language in sections 1 and 2 of the Fee and Reimbursement Purchases statute, but did not agree that MGM had found an issue of FI.
“This process was not meant as an appeal of the arbitrators’ award. It was meant to cure FI within the statute,” Ombudsman John Ziemba said.
“I frankly don’t see the need to hear. We’ve heard from these people a number of times. Personally, I think the arbitration process was very thorough,” Commissioner Gayle Cameron said.
“If we let the parties speak, maybe we won’t have to review the 275-page document,” Commissioner Bruce Stebbins said.
“I’m inclined to let people speak their piece,” Commissioner Stephen Crosby stated.
“We know we’ve opened a can of worms here. The FI [section] is a very narrow and specific function we meant to be protecting. Of course, everyone is going to jump into that wedge and make it as wide as they possibly can,” Crosby said.
Commissioner James McHugh objected to using the word “appeal” in reference to the Fundamental Inconsistency process and Crosby’s “can of worms” comment.
“The worms are the FI clause has given the loser the opportunity to appeal on a whole host of grounds. This is not an appeal, but they are trying to construe it as such,” Crosby explained.
MGM sought the right to decrease payments if the impacts to the West Side community were less than anticipated. MGM Springfield President Michael Mathis and Attorney Seth Stratton spoke to the commission.
“It’s hard for me to say this, it’s hard for the company to say this because we really believe in our position, but we accept that we lost each of these arbitrations. We’re not here to appeal those. We want the process to move forward,” Mathis said.
Stratton claimed that the payments were not directly linked to actual impacts and that “establishing minimum payments regardless of impact” was inconsistent with the gaming law and the other Surrounding Community Agreements MGM agreed to with other communities.
The arbitration ruling on April 24, called for MGM to pay $425,000 annually, an amount that will increase based upon the consumer price index. MGM had proposed a payment of $100,000. MGM will also provide an upfront payment of $665,000 for the reconstruction of Memorial Avenue and will pay for the town’s consultant expenditures, which is expected to total $150,000.
Attorney Jonathan Silverstein of Kopelman and Paige, P.C., spoke on behalf of West Springfield. He said, “We made our Best and Final Offer including the exact look back process MGM had been pushing. We submitted a much lower impact payment than we believe we will experience specifically based on that framework.”
Silverstein suggested the word “reasonable” be added to the Fee and Reimbursement Purchases section of the statute to ensure the money is spent on municipal needs resulting from the casino’s impact. “It was certainly never the intent of the town to the contrary,” he said.
The MGC voted 4 to 1 – Crosby objected to the deletion of the clause – to add the word “reasonable” and eliminate the sentence “The parties acknowledge that the community shall be free to direct the annual mitigation payment and the annual study cost reimbursement, together the annual payments, to any uses it deems appropriate and shall not be restricted to use the funds for any purpose set forth herein.”
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